Archives: Reports
A positive start to the week and month for the ASX, though the local index finished a long way from early session highs today as investors position themselves ahead of the RBA rate decision due out tomorrow morning. Tech was the main laggard which was particularly disappointing given the strength seen in the Nasdaq in recent sessions. The Materials sector was also lacklustre, struggling for direction with most Asian markets closed for Golden Week.
The RBA meets on Tuesday with financial markets expecting a 2nd-second consecutive pause following last month’s encouraging inflation data tipped the scales in favour of no change i.e. rates will remain at 3.6%. Even with inflation falling there is an outside chance of another hike but in our opinion, such a move would make no sense as signs are already emerging that the RBA may be winning the inflation battle i.e. after no hike in March why would they raise rates in April when the data on the whole has gone in the right direction?
The ASX200 slipped -0.3% over the shortened Anzac week where yet again the main action was to be found beneath the market’s hood, a bad 4-days for the iron ore miners dominated proceedings combined with further worries around regional banks and another failed takeover as TPG walked away from its $1.8bn bid for funerals business InvoCare (IVC) was enough to send the index slightly lower. On the bright side, we saw further M&A activity with Kirin bidding for Blackmores (BKL), a couple of positive surprises on the earnings front catching overconfident shorts plus a resurgence across many building & property nam
A solid end to a positive month for the ASX with 60% of the market finishing higher, although there were some fireworks happening under the hood with Megaport (MP1) up ~40% on better guidance. For the month, the ASX 200 put on +1.83% and it was the sectors that benefit from lower interest rates that saw the best of it, namely Property & IT while the Material’s were the only group to end April in the red.
We are switching from IGO to PLS in the Flagship Growth Portfolio
Post-COVID M&A activity has been extremely strong even as bond yields rallied and the US/Europe suffered a minor “Banking Crisis” courtesy of tumbling bond prices and awful risk management. Private equity was reported to be holding ~$US2 trillion at the start of 2023 and whatever the actual number is when we combine this with large cash reserves in the hands of Australian super funds plus cashed-up fund managers there remains a huge undercurrent of support for stocks.
The ASX fell again today, now down 5 consecutive sessions with Banks & Healthcare stocks contributing most of the pain at the index level. Concern stemming from the US financial system is headlining the media, however, in MM’s view, it has simply been a case of a tired market approaching a seasonally weak period and it made sense to take some cream off the top after a solid run for stocks.
Travel is enjoying a strong recovery after being basically shut down through COVID with travel bookings proving resilient despite extremely high prices e.g. the Australian Bureau of Statistics just reported that domestic holiday prices increased by 25% in March year on year while international soared an incredible +38%. We are clearly spending our pandemic savings and spreading our wings after being couped up by COVID for over 2 years.
A choppy session for the ASX today with a lot of company news met with key economic data. A weaker open, although better results from key US companies aftermarket saw US Futures rally which provided some support to local stocks, before the recovery really got underway post the inflation data at 11.30 am where the RBA’s preferred measure of prices came in a touch below expectations, and this reduces the chance of another hike in May.
The US market took a hit following a night of disappointing earnings as investors weighed through the numbers to evaluate the strength of corporate America in the face of higher interest rates – heavyweights Microsoft (MSFT US) and Alphabet (GOOGL US) reported after the bell with both being decent beats. The standout losers were First Republic Bank (FRC US) -49%, General Motors (GM US) -4%. and UBS Group AG (UBS US) -4.7% while for the bulls PepsiCo Inc (PEP US) +2.2% beat expectations. Bonds rallied sending the US 2 years back under 4% as recession fears lifted in the wake of weak stocks.
